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tv   Street Signs  CNBC  October 8, 2012 2:00pm-3:00pm EDT

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>> bob, thank you for joining me. that will do it for all of us on "power lunch." market's down about 30 points on the trading session. we'll see you tomorrow. street sign begins right now. have a great afternoon, everybody. why do gas prices go up so doggone fast and down some doggone slow? we are answering that aggravating trend right here on street signs today. congress slamming chinese companies, citing security risks. but are american companies and our economy facing a greater risk in going after the chinese? plus, do casinos create jobs or hurt them? and we take a closer look at how one company nearly has a monopoly on vision and if all of us are paying because of it. hello, everybody, and welcome, all. mandy is off today. stocks are slightly down. you are looking at a live look at keene, california where the
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president is about to speak in minutes. gas prices in some areas in california remain above $5 a gallon. will the president address the issue? we'll find out and bring you any headlines as they cross. but we begin with a question that is just annoying to every one of you out there. this is a chart of gas prices against oil. oil is the lime green line. you can see that when oil prices rise, gasoline prices also go up. quickly. however, when oil falls, gas prices fall much more slowly. why? and who's really profiting? we've got all angles this story covered for you. chris faulkner is ceo of brightling oil and gas. john kildo have, founding partner of agin capital. why does gas go up so fast and down so annoyingly slow. >> wholesale spot prices, when
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they go up, they're going to be quick to adjust the signs that they're going to sell the gas at retail prices. the opposite occurs by the factor of two. when gasoline prices go down slowly but half as fast as they would rise, the reason is, they're wrangling every piece of margin they can out of the gasoline and wrangling every penny they can out of those gasoline prices in an effort to make sure their margins which are already razor thin are as big as they can. >> who is "they"? the mom and pop service station owner? >> yeah. convenience stores. mom and pops. keep in municipal bond mom aom a costco, they're very concerned they'll be selling gas at a loss because they already operate at razor thin margins. that's what we saw in california over the last week when gasoline prices at wholesale shot up $1 for gallon. they raised those prices $1 to make sure they're covered. >> i don't need to tell you, chris, you're in texas. the political rhetoric when gas
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goes up, tends to fall on the shoulders of the big integrated oil companies pllike exonxoexxo chevron and others. >> every time the price of crude moves $20, that equals 50 cents at the pump for a price of gasoline. oil is an internationally traded commodity. it is not a u.s. based commodity so the korld markets dictate a lot of the supply and demand and ups and downs of these oil prices. you can't blame exxon when oil goes up or down. in turn, the refineries and the cost it takes, taxes, transportation, all of that is loaded in to the price of a gallon of gasoline. you can't go blame being the oil companies when gas is $3.86 a gallon nationally. >> jane, what is happening on the ground in california? any relief? sight? >> well, it's supposed to be but we're not seeing it at the pump. last week it seemed almost hourly these gas station owners would take their lives in their hands going out to change
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prices. we've seen prices drop dramatically. price hasn't changed here at costco. still cheaper than the national average but it is not changing right now. this is a map of what some say is the real problem here -- california's lack of refining and production process. look at how few pipelines there are coming in to california. you should see on this map all the pipelines around the u.s. so few coming in to california. so when you have a pipeline problem like we've had had, you've had some refinery problems like you've had and low inventories because of the way of california does its own gasoline, you've got a real problem. but some still don't buy this, brian. senator dianne feinstein has written a letter to the ftc saying you got to look into it, californians are used to seeing these large spikes and then things don't seem to go quite down so much. it doesn't seem to match with market fundamentals and she says many californians fear they are being manipulated, again, and she wants the ftc to look into it. >> shar bucs rolls out the
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pumpkin spice latte at this time of year. you guys roll out your own special blechbd winter gasoline. it is supposed to be released early. why isn't it helping? >> reporter: well, it's supposed to be released early but it hasn't been in big production because it wasn't expected until the end of the month. so the inventories of this winter gasoline are relatively low. they're going to start pumping it out now. they actually needless gasoline to make this winter blen d. one person was telling me by letting them make it sooner, it is almost like adding one more refinery on to the line. you will slowly start to see it now. starbucks has been planning for the pumpkin latte. refiners weren't planning for october 31st gasoline to be released on october 8. >> jane, thank you. do you agree with what chris said? what blame, if any, do the big integrateds have here? >> i think the big oil companies have made a premeditated decision to keep refinery run rates low to keep the pool of available gasoline inventories low and to keep the price
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relatively high as -- >> why? they don't need more political heat. >> they're their own worst enemy. gasoline demand has been consistently down from more than the past year now from 4% to 8% given the week that you look at it. these prices still keep going up and the refining margins haven't been good but they haven't been that bad but they've been holding back at low 80% utilization for much of the past year. we're going through it again right now, brian. >> but keep in mind we're not just producing gasoline at these refineries. also producing diesel, jet fuel and a number of other items. that are also things being exported out of this country with exporting some of these distillate fuels and finished products outside of the country. but you can't blame big oil because our supply numbers are up bigger than they ever have been. producing 6 million barrels a day -- >> yeah, but they make a decision not to run their plants so they can keep the available pool of gasoline down so that it stays at $3.50 and $4 a gallon. they're making a choice to --
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>> absolutely disagree. >> they're not in business to be benevolent but they're certainly doing this purposely. >> chris, being a texan, you know when the cowboys lose, somebody has to be blamed. it can't possibly be the team's fault. americans want someone to blame. who do they blame here? >> they always want somebody to blame. the reality is that, again, oil has remained high coming out of the summer months. we have now finally seen some relief on the oil prices coming down because of aipac, because of china. these are not good reasons that oil prices are coming down, keep in mind. but they are causing the price of crude to come down. that will impact gasoline prices going forward. i expect to see gasoline at $3.60 to $3.75 a gallon by year end. i predicted $3 a gallon gas earlier this year before isaac and before the issues we've seen in california and the bay town exxon fire we had on wednesday. all of these things are again moving targets. so i don't think exxon and chevron are out there saying let's hold back refinery capacity and run the price of gasoline up. reality is supplies are tight, refinery capacity is tight. there's been no investment in
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refinery since the '70s in this country. we need to have more refinery capacity so we can take hiccups like california and keep in stride. reality is pipelines go down, refineries have issues, they go into maintenance mode and we have no overhead in this country. that's not going to be fixed today. >> that's a great point on refineries. these refineries are about 40 years old. john, oil prices going up or down in the next weeks or months? >> down. particularly the slowdown we're seeing in china, the warning from the world bank this morning highlights that. there is more production of that coming online. those prices will get pressured lower, down towards $80, if not $75 a barrel. >> thank you both. learned a lot. america tossing a trade aga grenade against china. that's ahead. nearly every pair of glasses or sunglasses on earth was made by just one company. will you not believe just how big they really are. we're going to talk to a little guy trying to compete against
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the war of words between america and china has ramped up quickly, and now it is not just words. the congressional house intelligence committee is putting some chinese telecom companies on a black list saying they pose a security threat to america. could china, though, retaliate with actions to either sell our debt, which would raise rates, or even fight back by refusing to buy or make american products in china? let's ask the head of china research at isi group.
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is this going to set off a new battle in the trade war, don? >> brian, this is serious. it's not a few dollar subsidies on tires or higher making tv appliances in south carolina. it is geopolitics, it is national security. we've seen the u.s. intel committee's side of the story. we haven't seen theirs. but this has the potential of being very ugly. >> whether or not that report comes out to be completely accurate, to me i don't care about the report. when i heard what i thought was this had -- if you're the chinese government, you're saying, okay, america, forget you, we're going to dump some of your debt. see how i like higher interest rates. let's not buy a buick or gm product and forget about going to taco bell or kfc for yum brands. >> brian, i don't think the debt is the issue but i think it is quite possible that if china feels like they're getting a raw
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deal here, that either implicitly or quietly, they may feel like they want to punish us economically in some way and an obvious way is to try to source products from places other than america. this wouldn't be surprising at all. >> could you imagine if the chinese goft says cisco system, our version of huawei, essentially, was a security threat to them in china? >> exactly. so the china/japan little ruckus that's going on right now is perhaps instructive. both sides have got claims that the other side disputes, and what's happened is you've got a lot of chinese tourists going to japan that have canceled their trips and a lot of back-and-forth. we don't know where it is going to end up but it is the kind of thing that can get very serious
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and do a lot of long-term damage. >> we saw the president bar the sale of four wind farms in oregon a couple of weeks ago. now this when do we put the kibosh on this increasing rhetoric and saber rattling, don? >> brian, i think this is simply symptomatic of a global economy that's very weak. when those things happen, countries do what they see as in their narrow best interest and that's already happening. i suspect more of it will occur. the wind farm deal is really quite different i think than this one with huawei. but both are troubling. >> do you think huawei is a threat? >> you know, i don't know. just like you, i don't know if they really are or not. i've been to the company twice in the last year visiting. they are smart. they are aggressive. they make great products.
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but no one -- we don't really know what their final motives are. >> all right, don, always a pleasure. could that congressional warning about chinese telecom companies be a boon for the aforementioned cisco systems? after all, they are the biggest competitor to huawei, the chinese firm mentioned at the top of that report. cisco actually trading up on a rather down day. let's talk to an equity analyst at morningstar. grady, will cisco benefit from this report bashing huawei? >> so these security concerns and concerns over how huawei works in the u.s., they're not new and cisco's market share in the u.s. is very high and huawei has very little market share in both service provider and enterprise routers in the u.s. i don't know that this will
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really lead to incremental revenue growth for cisco. it does, however, just highlight a key challenge that huawei faces as it tries to penetrate the u.s. markets. >> let's say you're gigantic corp., inc. have you a $500 million purchasing budget. you're in a meeting, you're like well, maybe we'll spend a lot of this on huawei. someone says, no, did you see that report? did you see "60 minutes," did you see cnbc? you're not going to spend money on huawei. >> i absolutely agree with that. but these issues have been in place for many years. the other issues that huawei faces is penetrated the value-added resale channel. if you're a ceo, trying to allocate shelf space to network vendors, are you going to allocate your shelf space to huawei when you have cisco, juniper, hp, brocade that make excellent products and are well known in the u.s.
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so it certainly creates an ability to cisco to create an edge in the u.s. >> any reason to buy cisco just on the back of this report? >> not in the report but we do like cisco in valuation. twad trading at less than eight times unlimited free cash flow. we think investors continue to underestimate the company's ability and commitment to grow that yield over the coming years. >> grady, thank you very much. get this, america -- american express may be helping out pawn shops. we'll explain. but up next, a disturbing new finding that says members of congress are passing more and more bills to makes themselves richer. shocked? me neither. tdd#: 1-800-345-2550 let's talk about low-cost investing.
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let's develop more stars in education. let's invest in our teachers... they can inspire our students. let's solve this. if you want to get rich, forget wall street and go there -- to washington, d.c. because we've got a new look at just how wealthy congress really is and, more important -- how it is getting rich. our wealth editor robert frank is with us. this story literally blew my mind. >> it is amazing when you look at these numbers. more than half of the members of congress are in fact millionaires. many have seen their fortunes increase even during the
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recession. a report today from the "washington post" says that 253 members of congress are millionaires. their median net worth for the house is $746,000. for the senate it is $2.6 million. now wealth is spread equally between the gop and dems. 72 members have doubled their wealth since 2004. 73 of them have helped draft laws that help their companies or industries. voters are talking more and more about crony capitalism. to be fair, members of congress aren't doing as well as the rest of the millionaires. there are fewer millionaires in congress than there were eight years ago and 1 in 5 is worth less than they were in 2006. steny hoyer, for instance, lost 97% of his wealth even as his power in d.c. was growing. american millionaires have gotten most of their wealth back and the population of millionaires is also back. i should also add that many members of congress are wealthy because they started companies before joining politics.
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and to be fair, many of their spouses also made a lot of money and have little to do with politics. still, many say the laws in d.c. need to be tighter to prevent the rich and powerful from getting even more rich. >> there is a reason why 7 of america's 10 weltiest counties are now in the halo of washington, d.c. but what do we know the line between absolute ethical violation and just good timing really? >> right now the laws are really about disclosure. there's not much preventing people from enacting or even proposing legislation that would benefit their companies. now when you look at this compared to the overall american millionaire population, as a group they didn't do that much better so it is hard to say this is proof that these guys are making money from their jobs in d.c. but clearly there needs to be better disclosure, not just disclosure but also rules saying you can't participate in legislation. how hard should that be? >> the story in the "washington
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post" suggested even when there may be a conflict of interest, the ethics panel is like -- they don't care. >> they don't police their own. as we saw with the insider trading stuff, that was just blatant. there was no rule preventing any of that. >> i pushed bills to mandate cnbc in every home in america, and i will continue to do so! thank you, robert frank. health care has certainly been front and center in washington, and those stocks have been on a tear. the sector hitting new highs nearly every day. seema mody here as well to my left giving the industry a check-up. >> pharma and biotech have provided fat profits for the industry. today is a great example of why we're seeing capital being allocated in to pharma. medical advances. eli lilly's experimental drug slowed cognitive decline by 34% in patients with mild alzheimer's. morningstar says this is a $20 billion market so a lot of
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opportunity here. and another reason why investors like pharma. any thoughts? fat dividends. in the current low-rate environment, large-cap pharma yielding roughly 34%, which on average is 2% higher than stocks in the s&p and vastly outperform, the 10-year treasury note. pfizer is a top dividend payer in the group and a likely increase is expected by year end. shares of pfizer have gained 30% since lipitor went off patent last year thanks to recently launched drugs and solid earnings growth. not just pharma is on the move. biotech hitting several all-time highs in the past month. gilleon has a promising hepatitis c drug in development which it acquired in late 2012. m and a has been a major catalyst for biotech stocks.
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alexion is a player in a niche market which it can effectively dictate pricing which is a huge advantage making it an eye-catching target for large-cap drug firms looking to bill out their portfolio via acquisition. coming up on closing bell, we'll take a look at some of the standouts in the energy and utilities sector. now it will be really interesting to see what happens to health care stocks post the election. >> they have been soaring. it is an excellent report but i have to correct you on something. can you not say fat dividend. it is obese or overweight dividend. it is not politically correct. seema, thank you. eyeing a monopoly. we were fascinated by the "60 minutes" piece on how just one company makes nearly every single pair of glasses on planet earth. can anybody else compete? we're going to speak with a guy trying to compete. but up next, why this ad may
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mandy's off today so i've got your solo street talk. disney downgraded from above average to average. all-time highs. disney is a company that should be valued at one times their price to earnings to growth. they say, it is a strong case that disney is fully valued. the chart for disney has done very, very well. stock number two -- netflix. morgan stanley upgrading netflix to an overweight from an equal weight. morgan stanley saying they don't see amazon's video service as a real direct threat because they note that if amazon decides to
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unbundle video content from its prime membership, it is going to have a massive content gap with netflix that morgan stanley estimates will cost billions of dollars to close. morgan stanley adding shares look attractively valued. netflix shares up 25% over the past three months. carmax, kmx, this stock has been soaring all day, up now about 9%. research firm itg putting out some positive comments saying that retail revenue growth is accelerating. i called itg, i asked for the note, they wouldn't give it to us, said clients only right now but they did confirm they made positive comments. that is helping kmx and pushes the stock positive year to date. vringo. goes along with our china story. they are alleging patent infringement. they say a company failed to
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license their patents having to do with cellular networks. vringo looking for an injunction to stop zte from using them. that stock up 21.5%. our fifth stock, finally, facebook, falling on a downgrade. btig's rich greenfield cutting facebook stock to a sell. he has a $16 target on the name. cut his 2012 revenue estimate to $4.9 billion from $5 billion. cutting next year's view from about $300 billion as well. he cites tension between monetization and the user experience. what does that mean. let's find out. rich joins us now from 30 rock. rich, what did you mean by that growing tension? >> look, what facebook is experiencing is a pretty rapid transition to mobile. what happens is in the traditional facebook desktop experience if you have a pc or mac, there's a whole bunch of ads that run down the right side of the page. you may not have to focus on
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them. you can really disregard them if you're focused on the main center of your screen which is your news feed and where you do most of your arcses. what happens is you go into mobile, that advertising becomes far more visible. you can't avoid it. it is far more in your face. you are seeing it -- instead of taking up a small percentage off to the right, you're now seeing the entire screen filled with advertisements so you're seeing full-screen ads for walmart, full-screen ads for target. facebook's actually playing up the fact that the larger ads are a benefit of its mobile approach versus other companies. >> you've even noted that mobile ads tend to do better than desktop ads, don't they? >> sure. just think about it. they take up relative screen size, a tremendous amount of the screen, and we've got this problem that we've called the fat finger problem purp's scrolling through your facebook on your mobile phone and you accidentally touch something. remember, there's no confirmation so if you end up liking walmart or liking target, facebook doesn't say, hey, did you actually mean to hit that
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when you're on your mobile phone. you just touch it, you've now liked it, you're going to get push lots more walmart content but worse yet, all of your friends on facebook will start seeing ads, hey, rich greenfield likes walmart, you should like it, too, even if you didn't mean it like it in the first place. >> i've argued that the biggest threat to facebook is facebook itself. the announces like the one you just mentioned. maybe even the boredom of facebook. sounds like that could tick some users off. >> i think that's really the point. facebook is all about the user experience. when you forecast the growth rate of this company and thinking out over the next few years you really have to -- there's lots of potential competition. insta gram didn't exist two years ago. look how much they had to pay to acquire an alternative mobile social network based around pictures. people really can move very quickly to new places. for facebook it is all about maintaining the trust in user experience. what we've seen from an advertiser standpoint is more and more ads that don't seem to fit within the construct of what
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they should be doing. they should be focusing on a creative bar, not allowing ads that simply aren't good or are repetitive. they should be doing things to add to the user experience rather than detract. >> we want to show our viewers what we're talking about. this is an ad on facebook, ostensibly a walmart ad. you can see that in the upper left-hand corner, yet it is clear the ad is for smucker's jam, albeit for a small walmart ♪ note. you put out another note on facebook saying it looks like ads like this are breaching, if you will, facebook's social mission. what do you mean? >> i think when you like walmart, what are you trying to state? you are probably stating that either you really -- >> you enjoy the store -- the people. >> you enjoy -- or you want discounts from the store, or you want special promotions or you want to learn about what they're doing good for your community or whatever the things that really connect you with walmart. it is all about having that one
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to one relationship with the consumer. when you see what seemingly are -- what appear to be co-op marketing just like you would see in a circular on a sunday afternoon when you're seeing a circular and all of a sudden you see whatever brands want to pay walmart to be actively promoted or even on the end cap as you are walking through the walmart store, that co-op marketing is not why you like the brand. then when you go to things like, we've found where there is an abc ad, has nothing to even do with the walmart store at all. you're just basically seeing some form of advertising or marketing occurring that has nothing to do with why you liked walmart. >> to be clear what you're saying is, what you're suggesting is, i may be a jam hater. i find jam to be delicious, but let's say i hate jam but i like walmart. i get that ad, i'm annoyed because it is clear to me that that company, the jam company, sort of freerode on the back of my walmart like. why is that wrong? >> well remember, this is not a facebook ad. this appears to be promotions that walmart is running.
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so walmart is gunning for likes, trying to get as many likes as it possibly can, then appears to be doing some form of co-op marketing, "advertising," with other brands. there's nothing wrong with it. i actually understand exactly why walmart is doing it. it is nothing different than what they've done with end caps and circulars for years. the problem with facebook, one, it means the overall amount of things that feel like ads is growing. so the utility of your newsfeed is growing less useful with, which is certainly not good for long-term engagement. and two, they're not selling these ads or these placements. that's actually being done by walmart so facebook's not even participating in that revenue stream and getting back to your point that you cited on trust, it kind of feels like this is not why did i it in the first place, it is not why i'm really on facebook and it just seems to hurt that overall trust relationship you had with the consumer. >> we have to do our disclaimsers. we contacted both walmart and facebook. facebook said, our policies have not changed.
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retailers have always had the ability to use page posts to promote products they sell. as for walmart, they say they are not in violation of terms of use of facebook, nor has made facebook made any exceptions for walmart. the references in the btig or the cal are what they call organic posts and not funded by suppliers. i have no idea what they mean by organic posts either. maybe walmart can clear that up. >> can i just say one thing. >> by the way, let me introduce herb greenberg. herb used to be a member of this show but now he is working on far more important things. welcome back, my friend. >> always a pleasure to be here. i have to say, what rich just said was so significant. as a user and when i see these ads now coming up in the middle of my news feed, it is annoying. >> let's talk about another company. company i never heard about before today. green dot getting walloped on some american express and actually walmart -- >> american express is coming
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out with -- they have this bluebird card, a prepaid card. it is sort of a prepaid banking card. they are trying to get people out of their checking accounts noo in to use this bluebird card. they're partnering with a bunch of different companies, including walmart. what's interesting is the impact it's had on green dot. green dot is a prepaid debit card as well. what's the difference? there are differences in the cards. american express actually has a relationship investment in green dot. all i can tell you is this -- green dot would seem to have a lot to lose here if american express can muscle itself and get further into this business. >> green dot versus american express. that maybe not is a fair fight. you also rush over to our pods today, flailing your arms, screaming about how american express is helping pawn shops -- >> no, no, no, no. i reporting process starts, we see news, we start moving on it. easy corp. which is a payday lender, cash america, payday lender, their stocks started falling today. why were they falling?
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they were falling as a result of this -- i did my research. i don't think they're falling as a result of this. if they are, it is probably falsely the result of that because american express is not getting in the lending business. pay attention to lending corp. there is an s.e.c. filing if you take a look at it, wade through it -- >> very quick, please, sir. >> this is one of those patent plays. analysts dropped coverage. the firm noted card valuations implies values for patents that are much higher than any comparable valuations they've seen applied to patents elsewhere. there is a lot more going on in the courts. i'm getting hate mail on this company. >> if you're getting hate mail, it means you're doing something right, my friend. good to see you. you dropped some pounds. look fantastic. let's get a market flash. taking a look at retail
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sector but also at sears holding at hld. a look at this chart today, seeing a steady climb after the company announced some plans for the holiday season along with k-mart eliminating layaway service fees, saying this holiday season is projected to be the busiest since 2007. near 3% pop today. sears is trading at $58.37. >> good news in the retail side. did you know there is a massive monopoly that basically has the entire eyewear market cornered? we're going to reveal the name of the company that may be making your glasses much more expensive. and, here's a question -- do casinos really bring in new cash and create jobs? or just transfer money from middle and lower class people to companies and the government? we will head to ohio for that debate next. smart comes with 8, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ coming up on the closing bell, first it was problems with maps, then it was complaints about scratching. now the iphone 5 has a purple haze issue with the camera. does apple have much more than just an image problem? plus, how come when oil prices plummet, gasoline prices fall like a feather? somebody here says it's because refiners are doing something they haven't done since 1940.
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and is the u.s. on the fiscal road to greece? we'll ask the architect of greece's debt deal. but first, more street signs with brian. and by the way, we talked about iowaway on t about huawei. thant view vp of external affairs. brian schactman is live at a new casino in columbus, ohio. >> it is true, brian, at least in the near term it is absolutely true. about half the country is on-board with adding casinos. it's become an easy way to generate tax revenue and jobs. the number is sure to grow. here at the hollywood casino in columbus, ohio, they opened
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their doors up a couple hours ago. they've already had at least 12,000 people come through their doors and roughly one-third of everything they spend will return to the state, city and county governments in taxes. now i spoke with the chief operating officer of penn gaming which actually runs this casino. he said it shouldn't be difficult to figure out why there's such a rush to welcome in gaming. all you have to do is look at history. >> we've seen a growth early 90s when the desert storm recessionary period hit when a number of states in the midwest and south opened up their borders. now in these tough economic times we've seen states like massachusetts, ohio and florida open up their borders to commercial gaming as well. >> look what it's done in pennsylvania. it expanded its gaming two to three years ago. it now takes in more gambling tax money than nevada. indiana, new york and louisiana all rake in more than half a billion a year. nationally kw lly gambling is $ billion a year in revenues but 8
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$8 billion in taxes. took 3,500 construction workers to build this place. 2,000 casino workers staff it. obviously it is a big deal in terms of job creation. now there are indirect jobs, too, expected to be built around this facility because they want to build up the area. now the biggest question is supply/demand. new jersey's been absolutely cannibalized by what they've added in mad added in pennsylvania. next spring they'll open their fourth casino. eventually they'll open one of these things and it is not going to do well, but right now there is a demand for it. >> it is definitely hopping there. brian schactman, have a good time. spend some money. so are casinos a good bet for a community? for your community perhaps? joining us, jim rubens, chair of the granite state coalition against expanding gambling. on the cnbc news line, judy patterson for the american gaming association. judy, reading a paper earlier today on the business impact of
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licensed casino gambling in west virginia, and it basically stated, over time, casinos cost communities more than they bring in. your response? >> absolutely false. there is study after study to show. there's also, i want you to remember, history since 1977 when the first casino -- when we just had casinos in nevada. it is now expanded, as your commentator said, to 23 states. we have the experience of demonstrating that nationwide we have over 350,000 jobs that are created, and those are just direct jobs. that's not talking about the jobs that are created for all the suppliers and vendors that provide products to this industry, nor is it talking about the jobs that all those casino employees and all of those other suppliers and vendors create when they take their wages and go back out in the community. >> jim, what's your concern about casinos in new hampshire?
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>> this is nationwide. casinos don't create jobs. can you get away with saying that by looking at one side of the balance sheet. for every casino job gamd, you've ended up cannibalizing jobs in the exiting local economy. don't take it from me, listen to an expert on this, donald trump. "people spend a tremendous amount of money at casinos, money they'd ordinarily spend buying a refrigerator or car. every casino job and every dollar of economic activity in casino is a job stolen from thousands of existing local businesses, retailers, restaurants, hotels, entertainment venues." >> judy, your response. >> well, studies that were done in 2011 of community leaders in casino states -- these are people who live and work in all of these communities. 76% of those people said that casinos have done more to help their community than to hurt it. and 88% said that the problems
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that they were concerned about before casinos came in never materialized. >> guys, we're going to continue to debate another day. i know we're kind of waiting on the president in california as well. so thank you. we'll have you both on again, the issue not going away. half a billion glasses are being worn around the world. those are made by just one company. we're going to speak with a little guy trying to go against this bespectacled giant. [ male announcer ] trading's like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade.
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if you're in the market for a mu pair of specs or shades, but 5 million pair of glasses around the world are made by one company, luxotica. "60 minutes" took a look at it last night. let's take a closer cnbc look and take a look at the competitive look, bringing in barry engel, and neil bloom bloomenthal. first off to you, neil, what's it like to compete with a luxotica? >> right now we've chosen our
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battleground, which is selling glasses online and we really haven't experienced going head-to-head against them. we were excited about this industry because we saw glasses were being marked up by 10 to 20 times what they cost a manufacturer. so that's what attracted us to build this company because we thought we could go directly -- design our own frames, sell them to consumers with $95 with prescription lenses. >> it's an interesting point. barry, to neil's point, doesn't the internet model change the idea of what we think to be a monopo monopoly? >> usually, no. that's because often the company that dominates in the real world tends to often dominate online as well. and with glasses, you know, i think there are going to be a lot of people who want, insist on going to a doctor, looking at how these things fit on thursday face, having them fitted to their face. so, i think that a lot of people
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will go online. i admire warby parker for what they're doing. i don't think it will change the fundamentals by most americans. >> is a monopoly, by its nature, a bad thing? they're not illegal, fonl they stifle competition or make barriers to entry. >> they can be bad things. i think in this case we're looking at a company resulting in -- people are paying a lot higher prices for glasses than they used to, for the exact same piece of equipment they bought 10, 20 years ago. you got less real choice. a lot of variety but it's sort of a false variety. it's controlled by one company. and i think you're also seeing a lot of small businesses, which are the backbones of all these communities, being put out of business. the independent optician, the independent optometrist. this is a social issue that's a fundamental importance for our economy. so, in this case, i think that
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this particular company, the effects are pretty bad in almost every part of the economy. >> neil, i know you're working to fight this, perusing your website, i see your prices a lot less than some competitors but are glasses, overall, more expensive than they need to be? >> we definitely think so. you know, this is technology that's been around about 800 years. >> that's it? >> so, it doesn't make sense that glasses should cost as much as an iphone. so, that's what -- that's where i think you see the impact of a company like luxottica. you know, we were frustrated consumers. that's why we started warby parker. we would walk into an optical shop. we thought we had all this choice but we realized it was coming from one company. the prices were ridiculously expensive. >> and do you agree, neil, at some point you'll be approached by luxottica as ray ban and others have been? >> it wouldn't surprise us. you know, i think that we're in a different position than, let's say, oakley was, because oakley,
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you know, couldn't compete with luxottica and that's why they had to sell. it came out in the "60 minutes" point where the ceo of luxottica said we reached a mutual understanding because luxottica basically squeezed oakley out of their distribution channels and was squishing their margins, whereas we're trying to build one-to-one relationships with our customers by going direct through our website, by going direct through a retail store we're about to open later this year. >> barry, quickly, are monopolies getting worse or better in america? >> radically worse. this administration, for one, it not doing anything to fight them. >> we should go after them? >> not -- >> not luxottica, monopolies in general? >> many of them, yes. it's an issue -- it's fundamental liberties. you want to distribute power as much as possible. monopolies make it harder to do business in this country.
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>> barry and neil, good interview, good discussion. thank you, gentlemen. take care. >> thanks for having us. the terrifying shortage that has pie makers everywhere very nervous. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. ♪
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[ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪
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we leave you with this. forget bacon because here comes the apple shortage. not the iphone variety. the actual fruit. this year's apple crop down 14% from last year. could be the smallest in 26 years. sp


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